What are the primary sections of the U.S. tax code and Regulations’ that govern NRA reporting and withholding?

The primary sections of the U.S. tax code and regulations that govern NRA (nonresident aliens) reporting and withholding are:

1. IRC Section 1441: This section generally sets forth the requirements for withholding tax on nonresident aliens. It includes details on the persons subject to withholding, the types of income subject to withholding, the entities qualifying as withholding agents, and the statutory withholding rates.
2. IRC Section 1442: This section requires the withholding of tax in certain cases with respect to payments made to foreign corporations. It aligns with the provisions of Section 1441 but specifically addresses foreign corporations.
3. IRC Section 1443: This section requires the withholding of tax in certain cases with respect to foreign tax-exempt organizations and prescribes the 4% withholding rate applicable to foreign private foundations.
4. IRC Section 1461: This section sets forth a withholding agent’s liability for under-withheld tax. It ensures that the withholding agent is responsible for the tax that should have been withheld and paid to the IRS.
5. Treas. Reg. Section 1.1441-1: This regulation provides detailed rules on the withholding of tax on nonresident aliens, including the responsibilities of withholding agents, the types of income subject to withholding, and the documentation requirements for claiming exemptions or reduced withholding rates.
6. Treas. Reg. Section 1.1441-2: This regulation prescribes additional exceptions to when withholding is required under Chapter 3, including specific rules for different types of income and circumstances under which withholding may not be necessary.
7. Treas. Reg. Section 1.1441-3: This regulation provides rules for the timing and manner of withholding, including the procedures for withholding on payments made to nonresident aliens and the requirements for depositing withheld taxes.
8. Treas. Reg. Section 1.1441-4: This regulation outlines exceptions to withholding for certain types of income that are effectively connected with the conduct of a trade or business within the United States.
9. Treas. Reg. Section 1.1441-6: This regulation provides rules for claiming treaty benefits, including the documentation requirements and the due diligence standards that withholding agents must follow to apply reduced withholding rates under tax treaties.
10. Treas. Reg. Section 1.1441-7: This regulation defines the term "withholding agent" and outlines the responsibilities and liabilities of withholding agents in connection with NRA withholding.

These sections and regulations collectively govern the reporting and withholding requirements for payments made to nonresident aliens, ensuring compliance with U.S. tax laws.

Sources:
§ 1441. Withholding of tax on nonresident aliens
§ 1442. Withholding of tax on foreign corporations
IRM Part 4. Examining Process. Chapter 10. Examination of Returns. Section 21. U.S. Withholding Agent Examinations - Form 1042
IRM Part 3. Submission Processing. Chapter 22. International Error Resolution. Section 110. Processing Form 1042 Withholding Returns
IRM Part 3. Submission Processing. Chapter 21. International Returns and Documents Analysis. Section 110. Processing Form 1042 Withholding Returns
PMTA 2011-002